• Tuesday, May 28, 2024
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AFC leads in financing of the landmark $900 million Kpone IPP


The Africa Finance Corporation (AFC) has today executed the financing of the Cenpower Generation Company Limited (Cenpower), which is implementing the Kpone Independent Power Project (Kpone IPP), a $900 million project comprising a 350 megawatt (MW) combined cycle gas turbine power plant, a 161kV substation, liquid fuel (Light Crude Oil and Distillate) storage, delivery and supply infrastructure and Working Capital Financing for fuel.

To be located in Tema, near Accra, the Kpone IPP will provide an additional 10 percent of Ghana’s generation capacity when it comes on-stream in 2017, 20 percent of its available thermal generation, and supply power to approximately 1 million households.

Kpone IPP has been in development for over ten years and registers a number of significant firsts: It is the first Greenfield project finance IPP in Ghana; it is the largest IPP in Sub-Saharan Africa in the last 10 years; it is the largest private power plant financed in Sub- Saharan Africa; and it is Sumitomo Corporation of Japan’s first thermal IPP investment in Africa.  The plant will be constructed by Group Five of South Africa.

AFC, a multilateral finance institution, was established in 2007 with a capital base of US$1 billion, to be the catalyst for private sector infrastructure investment across Africa.  AFC fills a critical void in providing project structuring expertise and risk capital to address Africa’s infrastructure development needs, and is increasingly being seen as the benchmark institution for private sector investment in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications.

AFC is the lead project developer, mandated lead arranger as well as the single largest equity investor in the project.  The project was initiated in 2003, by Cenpower Holdings Limited, representing a group of Ghanaian entrepreneurs.  In 2005, the group partnered with Infraco. In 2010, AFC acquired a controlling equity stake in Cenpower and assumed the role of lead project developer.  Today, following the exit of InfraCo, the equity investors in the project will together provide equity funding of circa US$250-million.  They includeAfrica Finance Corporation, through AFC Equity Investments Limited, a wholly-owned subsidiary of AFC (31.85%), Sumitomo Corporation (28%), Cenpower Holdings Limited (21%), Africa Infrastructure Investment Managers (AIIM) (15%) and FMO (4.15%).

AFC is the Global Lead Arranger of the $650 million debt funding for the project.  The debt funding comprises a $446 million 15-year commercial bank export credit backed facility, with Rand Merchant Bank (RMB), a division of FirstRand Bank Limited, as the global coordinator, initial mandated lead arranger, book runner and hedging coordinator and a 15-year development finance facility totaling $204 million, arranged by FMO, the Dutch Development Bank.

Andrew Alli, President and Chief Executive Officer of the Africa Finance Corporation in recognizing the transformative impact of the project remarked “AFC’s long term vision is to help address Africa’s infrastructure deficit and ensure sustainable economic growth for the continent.   The full growth of the Ghanaian economy cannot be realised without an efficient and functioning energy sector.  Power is one of AFC’s high priority sectors for investment, and arguably Africa’s most significant need.

The exceptional feature of the project is that it is African. The initiative was African, as were the founding shareholders and the construction company. Moreover, 67 percent of the equity is held by African entities, 83 percent of the senior debt is issued by African lenders and the African commercial banks involved provide 70 percent of the total debt.  AFC was created to address the infrastructure investment deficit and is privileged to be providing an African private sector investment solution, to drive economic growth and industrial development in Ghana”.

Oliver Andrews, Executive Director, Chief Investment Officer and Head of the Cenpower Project Development Team, said: “This is another key milestone for Cenpower as we achieve financial close. As co-developer and lead investor in Cenpower, through AFC Equity Investments Limited, we are delighted to bring to the table both long-term infrastructure financing and project development expertise in a project of many firsts, ably demonstrating Africa’s ability to lead on the path to Africa’s economic transformation. ”I am delighted to welcome on board long-term investors of the international standing and calibre of Sumitomo Corporation, AIIM and FMO. It reflects Africa’s increasing appeal as an investment destination and the commitment of the private sector to address the continent’s infrastructure funding gap.”

Samuel Nana Brew-Butler, Chairman of Cenpower, concluded: “I should like take this opportunity to thank the team at InfraCo for sharing our vision for Kpone and for their contribution in bringing the project to this stage. Recognizing the crucial role that Cenpower will play in meeting Ghana’s future electricity needs, we and our equity investors are all now galvanized to bring Kpone into production on time and on budget.”